U.S. v. Nill

Decision Date05 September 1975
Docket NumberNo. 74-3428,74-3428
Citation518 F.2d 793
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Carl Jonathan NILL, Defendant-Appellant.
CourtU.S. Court of Appeals — Fifth Circuit

Albert J. Datz, Jacksonville, Fla., for defendant-appellant.

John L. Briggs, U. S. Atty., Peter L. Dearing, John J. Daley, Jr., Asst. U. S. Attys., Jacksonville, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before TUTTLE, COLEMAN and SIMPSON, Circuit Judges.

COLEMAN, Circuit Judge.

A jury in Jacksonville, Florida, convicted Carl Jonathan Nill on both of the following charges:

On or about the 13th day of January, 1970, in the Middle District of Florida,

CARL JONATHAN NILL

knowingly and fraudulently did present a false claim in the amount of $13,593.05, for proof against the estate of Jacksonville Tile Company, Bankrupt, Court No. 69-222-BK-J, which said sum purportedly was the outstanding balance on a loan to the bankrupt by The State Bank of Jacksonville, whereas, in truth and in fact, as CARL JONATHAN NILL well knew, said sum and loan had been repaid to the bank on October 28, 1969, and the balance on said loan as of January 13, 1970, was ".00"; in violation of Title 18, United States Code, Section 152.

and

On or about the 23rd day of June, 1970, in the Middle District of Florida, after the filing of a bankruptcy proceeding in the matter of Jacksonville Tile Company, Bankrupt, Court No. 69-222-BK-J,

CARL JONATHAN NILL

knowingly and fraudulently did withhold from Victor E. Raymos, Trustee in Bankruptcy of the Bankrupt, documents relating to the property and affairs of the bankrupt; that is, a liability ledger card in the name of Jacksonville Tile Company from The State Bank of Jacksonville showing loans and repayments during the period of May 9, 1969, to October 28, 1969, showing an outstanding balance of ".00" on October 28, 1969, the said Victor E. Raymos, as such Trustee, being then entitled to possession of such liability ledger card; in violation of Title 18, United States Code, Section 152.

On appeal, Nill urges that the evidence was insufficient to support his conviction for either offense and that prejudicially irrelevant evidence was admitted against him.

Both of the offenses for which the appellant stands convicted arose from his activities as a loan officer at the State Bank of Jacksonville, Florida, wherein he used his position to make bank loans to his financially troubled corporation, the Jacksonville Tile Company.

Count I

In April, 1969, Nill and another individual, acting on behalf of a corporation which they wholly owned, bought Jacksonville Tile Company. Within a few weeks after the purchase, Nill, as bank loan officer, approved a $10,000 loan to the Tile Company. Additionally, he loaned Tile Company President James Lynch $5,000, which Lynch used to benefit the Tile Company. In mid September, 1969, when the Tile Company bankruptcy appeared imminent, appellant sought to protect Lynch. On behalf of the Bank, he took a $5,000 note from the Tile Company in exchange for Lynch's note. The $5,000 note was, however, endorsed by Lynch.

A petition for involuntary bankruptcy was filed against the Tile Company on September 30, 1969.

A month after this petition was filed, apparently in an effort to insure that the Bank would be paid, or to erase the impression that he was loaning the Bank's money to debtors financially unable to repay, defendant persuaded James Lynch to give the Bank a note for the amount of money which Tile owed the Bank. This Lynch note was for $20,000. It covered not only the two outstanding notes of the Tile Company but also a note owed by a Lynch employee as well as a sum that was advanced to Lynch himself. The following instruction was stamped on the note:

                " THIS IS YOUR AUTHORITY TO
                  DISBURSE TO
                  JACKSONVILLE TILE COMPANY
                  COMM. NOTE 61595                    $10,144.44
                  JACKSONVILLE TILE COMPANY
                  COMM. NOTE 62045                      3,612.96
                  INSTALLMENT LOAN OF
                  GEORGE D. BOND, JR
                  42321                                 4,679.63
                  BALANCE TO JAMES L. LYNCH             1,562.97
                                                      ----------
                                                      $20,000.00
                              s/ James L. Lynch
                              ----------------------
                                 JAMES L. LYNCH"
                

The Tile Company notes were neither cancelled nor surrendered. Nevertheless, the bookkeeping department at the Bank credited its "Notes Receivable Tile Company" account with the proceeds of the above note, thereby leaving a zero balance on the bookkeeping records.

By way of greater detail, it was shown that the defendant had been involved in many financial enterprises. For many of them he approved loans from the State Bank of Jacksonville, of which he was vice president and loan officer, to corporations in which he had a substantial financial interest. He approved these loans without disclosing to the Bank his financial interest in them and, of course, without securing the prior approval of the Board of Directors of the Bank. This appears to have been a violation of state law and sheds light on the motives and methods by which Nill operated but, obviously, he was not here being tried for this conduct.

In many of these activities Nill's partner was James Lynch. Nill personally approved loans totalling over $450,000 to Lynch, despite the fact he had been cautioned by the loan officer who had previously managed Lynch's account to limit Lynch's line of credit to $20,000, and these funds were used in ventures owned jointly by Lynch and Nill.

Nill had negotiated the sale of Jacksonville Tile for one dollar, and thereafter approved several loans to it in an effort to make it profitable. The efforts failed, and, as already stated the company was sent into involuntary bankruptcy.

The record would warrant an inference by the jury that such a bankruptcy of a debtor of the Bank would come to the attention of the general counsel of the Bank; that at this time Nill's history of self-dealing would have been revealed to the Bank and that Nill undertook to prevent this from happening. It could have been inferred that he had devised the strategem of having James Lynch assume the Tile Company's debts, that he persuaded Lynch to sign a promissory note for $20,000 $13,757.40 used to discharge the two Tile Company notes, $4,679.63 to discharge the debt of one George Bond, and the remaining $1,562.97 going to Lynch in cash. The Bank records showed no balance due on the two outstanding Tile Company's notes, but it is equally true that Tile's notes to the Bank had neither been cancelled nor surrendered.

On January 13, 1970, Nill submitted a claim to the Trustee in Bankruptcy on behalf of the Bank, claiming $13,593.05 as the outstanding amount owed the Bank by the Tile Company. He then made the unusual request that any subpoenas issued by the Trustee be sent to him personally, rather than to counsel for the Bank. Six months later a subpoena was issued by the Trustee, requesting that the $13,593.05 claim be documented with bank records. Nill submitted a loan liability card which showed a $13,593.05 balance owed by the Tile Company when, in fact, the original bank liability card showed a zero balance. The Trustee eventually paid $8,593.05 to the Bank; his check on behalf of the bankrupt was deposited in the account of James Lynch, and was shown to have been used to reduce Lynch's total indebtedness to the Bank.

With this exposition of the facts, we now turn to the applicable law.

A promise of payment by a third party does not in and of itself relieve the primary obligor. A person is entitled to the benefits of all the contracts he has made. He may obtain one or a hundred promises to pay a given debt and is entitled to enforce any one of them, even though he, of course, is entitled to but one performance, Wishart v. Gates Rubber Company Sales Division, Inc., 163 So.2d 503 (Fla.App., 1964). In exchange for his note a third party can obtain a contract from the creditor for the release of the debtor. The debtor can enforce this contractual release, or promise to release, in any jurisdiction which would recognize the debtor as a third party beneficiary of the discharge contract.

Florida apparently is a jurisdiction which allows the debtor as a third party beneficiary to enforce a release agreed upon by his creditor and a third party. In Wishart, supra, individual officers of a corporation executed a note to plaintiff. Subsequently, plaintiff, feeling insecure, took a note from the corporation for the debt that the individuals owed. Upon receiving the corporation's note, the plaintiff credited the individuals' accounts, thereby showing that the individuals owed plaintiff nothing.

Subsequently, plaintiff sued both the corporation and the individuals. One of the individuals defended on the ground that the corporation's note had discharged the individuals. The Court expressly recognized that the creditor and a third party could enter an agreement to discharge debtor which would be enforceable by debtor. It went on to hold, however, that the agreement must be an express one:

"The law in Florida seems to require that there be an express agreement that the giving of a negotiable instrument shall operate as a payment if it is to have that effect. This rule was announced in Frank v. Williams, 36 Fla. 136, 18 So. 351, and prior thereto, in Salomon v. Pioneer Co-operative Co., 21 Fla. 374, and cited with approval in Holcombe v. Solinger & Sons Co., (5th Cir.) 238 F.2d 495, 74 A.L.R.2d 728, 733. Since the intention and purpose of the taking of the promissory note in this instance appears conclusively to have been for the purpose of further securing the debt due by Tire Service to the appellee, no factual issue as to intent was left for the jury to determine." 163 So.2d at 506.

Conceding the generally questionable nature of Nill's practices and conduct, the fact...

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